The Integrated Approach to Branch Service Delivery
Despite 25 years of technological advances, retail banking products and services - depository accounts, investment products, credit facilities, and so on - are still delivered primarily at branches.
Alternative delivery mechanisms such as payment of bills by telephone and home banking have become available since the advent of automated banking and the innovations in telecommunications. But the branch remains central to the customer relationship.
The three branch delivery systems - tellers, the customer service platform, and self-service - still tend to operate independently, even though they are serving the same customers and are performing many common functions.
Teller terminal systems, with a fixed set of transactions tied to depository accounts, were introduced in the 1960s and became widespread in the 1970s. Early teller systems employed "dumb" terminals and branch controllers unique to teller functions. The majority of teller systems still in use today are of that architecture. However, a migration to industry standard solutions running on microcomputers has begun in recent years.
The Sales Culture
Deregulation and competitive pressures in the late 1970s and early 1980s brought a need for customer service personnel more oriented toward marketing. These workers have an increasingly broad range of retail delivery responsibilities, from opening depository accounts to selling and cross-selling credit products such as home equity loans.
Platform systems evolved throughout the 1980s, usually independently of the already installed teller systems. The PC revolution, concurrent with competitive demands in retail delivery, led to more sophisticated platform systems, often in the form of MS/DOS personal computers as workstations.
The most recent platform offerings include local area networks (LANs) and the integration of teller and platform functions on the same branch system.
Shift to Self-Service
Somewhere between the advent of automated teller systems and the recognition of the need for platform systems, automated teller machines and cash dispensers were introduced. These devices improved service and provided greater convenience by shifting teller tasks to the customer.
Working with access cards, it became possible and popular for banks to join together in ATM networks. These remain primarily a branch function, though ATMs are increasingly found in supermarkets, transportation centers, and shopping malls. In retail banking of the 1990s, ATMs are a competitive necessity and a key method of retail delivery.
More recently, another type of self-service delivery device has emerged. It supports noncash transactions and is an aid to customers seeking bank product of service information - rates, fees, minimum balances, loan payment models. The customer-activated terminal (CAT) may be an extension of the network of existing ATMs and cash dispensers, or it may be independent.
Integrated Delivery System
The microprocessor revolution, the movement toward standards-based open-system architecture, and technological advances in both local and wide area data communications networks make it possible to consider branch automation (and off-site self-service) through one integrated delivery system.
Some of the key features of an integrated branch-level retail delivery system, all based on widely accepted industry standards, include:
* An in-branch Token Ring LAN.
* OS/2 as the standard operating system for all workstations and servers connected to the LAN, including teller and platform workstations, ATMs CDs, and CATs.
* One gateway to the bank's wide area network.
* An optional LAN bridge for connecting off-sit ATMs into the branch retail delivery system.
As a result of these initiatives, banks can plan, specify, design, acquire, install, and maintain their retail delivery capabilities as one integrated system. In addition, the many banks already committed to OS/2 teller or platform systems of Token Ring LANs can now benefit by integrating their self-service delivery systems into that same system environment.
Flexibility Improve Service
Flexibility and its value in the self-service components of retail delivery also received attention in the design of the new features of its ATMs, CDs and CATs. During peak periods such as Friday lunch hours at busy locations, ATMs connected to the branch LAN can be switched to perform as limited-function cash dispersers.
A further example of flexible operation is the elimination of the ATM access card under certain conditions; accounts may be accessed via personal identification number (PIN) only for ATMs and cash dispensers installed in branch lobbies. In this instance, use of self-service devices can be observed by branch personnel, and customer service personnel also can monitor irregular transaction efforts by customers (for example, multiple PIN entry failures) as well as the operation status of self-service devices connected to the in-branch LAN.
Improved customer service is the greatest benefit of an integrated retail delivery system.
Efficient and standardized customer service for the bank's full range of retail products and services can be designed and attained - on customer terms - permitting an on-the-spot choice of the most appropriate delivery method, personal or self-service, based on convenience, responsiveness, service fee, and security.
A Menu of Options
Customers can choose the delivery method from a full range of personalized services - from tellers or customer service personnel to quick cash from a local or remote cash dispenser or ATM to full self-service banking at any time of day from an off-site ATM. The addition of new services at the teller counter and via an ATM can be designed and introduced concurrently and in like form throughout the integrated network.
Flexibility in the distribution of services according to availability and demand will shorten peak-hour lines at both staffed and self-service delivery points.
The product and service information presently available to the platform officer can be available immediately - and on a self-service basis - through an customer-activated terminal in the lobby. It is possible to monitor customer interest at the workstation for direct follow-up.
Operational Benefits
Design, implementation, and operational benefits from increased standardization will also accrue from the integrated delivery system concept.
The time and effort required to design new services will be limited to a single, industry-standard delivery system.
The increased use of shared resources within the branch and between the branch and the bank's host system will result in more efficient network utilization and probably reduce data communications costs.
Installation and maintenance costs for standardized systems are significantly lower than for discrete, parallel systems.
The bank's network management system can be employed for both the self-service and staffed parts of the total delivery system.
Consolidation of technical support for retail delivery under the integrated concept can bring better service at lower cost.
Also, since the branch staff can monitor self-service operations more closely, security is enhanced and card fraud reduced. Improved and more responsive security features lead to reduction in the incidence of card fraud. And vandalism of ATMs can be reduced through improved operational oversight.
Both branch networks and retail delivery systems have grown as technical capabilities and marketplace demands have changed over the past two decades. Today's typical situation includes separate teller, platform/customer service, and self-service delivery systems.
The progress toward integration of these discrete systems will accelerate with the continued growth of microprocessor-based open systems that integrate all of the retail operations to provide improved customer service; competitive advantage; design, implementation, and operational benefits; and enhanced security.
Mr. Barone is chief executive officer of InterBold, a marketer of automated teller machines and other self-service banking devices. The company is based in North Canton, Ohio.
